Sifted - Out with unicorns

Good morning there,

Venture investing and startups are flashy business, and a lot of the attention often centres around massive valuations, buzzy funding rounds and big promises. But amid all the noise, it’s important to refocus on what really matters: companies making money from products or services that matter to people, and providing employment. Today, Amy Lewin takes a look at Sifted’s inaugural leaderboard of 100 high-growth companies in the UK and Ireland — based on revenue growth over the last three years — and highlights a few big ones that made the list.

Elsewhere today, we dig into the UK’s upcoming visa for researchers and interns in “critical” areas like AI and quantum, Europe’s now-test-ready hyperloop tunnel and why one big growth investor in Europe doesn’t think startups are “out of the woods yet”.

— Anne Sraders, senior reporter

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Out with unicorns, in with moneymakers

A lot of noise is made about startup valuations. VCs and government ministers obsess over the number of unicorns they have, while founders boast when their startup’s price tag goes up and rant when it goes down. 

But a company’s valuation doesn’t really matter — until it’s sold or goes public. 

As Evelina Anttila, managing partner at early-stage VC Wellstreet, told me a few months back, “the valuation that really matters is the one at exit — the rest are artificial milestones to get you there.” 

So what numbers should startups shout about?

We’d say revenue and headcount. Businesses are, after all, meant to make money and provide jobs for people. 

And so, this week, we launch the inaugural Sifted 100: UK & Ireland — a ranking of 100 high-growth companies, based on revenue growth over the last three financial years. Between them, these businesses employ more than 16k people and have generated revenues of more than £6.5bn over the past three years. 

Topping the list is business neobank Allica Bank, with a compound annual growth rate (CAGR) of more than 1,000%. It offers business savings accounts, current accounts, commercial mortgages and asset financing to UK SMEs, employs 269 people and reported revenues of £48.3m for the year ending December 2022.

The ranking is dominated by the fintech sector — with 31 entries it's the most populous vertical in the list, just ahead of the 25 B2B SaaS startups that also made it.

The highest recorded revenue, however, came from online streaming platform OnlyFans; it made £881m in the year to November 2022. Mobile games maker Tripledot had the second highest revenue (£238m in 2022), followed by food delivery startup Hungry Panda (£114m in 2022). 

When it comes to employees, surgical robot-maker CMR Surgical is supporting the most jobs, with 918 employees, followed by HungryPanda (875) and retirement platform Smart (673). 

We’ll now turn our attention to the moneymakers and job creators in the rest of Europe, including France, Germany and the Nordics. If your company should be on one of our regional leaderboards, apply here. 

— Amy Lewin, editor

🤔 Europe needs a continent-wide stock exchange that could work as the “European NASDAQ”, according to a policy report published by software industry body Boardwave. The report criticised Europe’s “dreadful” track record of scaling software companies. 

• Phill Robinson, Boardwave’s founder, shared the report with the UK’s technology minister Michele Donelan last week, warning her that mid-sized software companies had received little support from the UK government compared with big tech companies and VC-backed startups, according to Reuters.

⚡️ Energy demand in the UK from commercial data centres will increase sixfold in the next 10 years, according to John Pettigrew, the chief executive of the country’s National Grid. Pettigrew said this is a “pivotal moment” that “requires innovative thinking and bold actions to create a transmission network” fit for the needs of industry — an issue Sifted has been keeping a close eye on.

• “Today, just like in the 1950s, we find ourselves with a network that's constrained,” he said. “Demand on the grid is growing dramatically and is forecast to double by 2050 as heat, transport and industry continue to electrify. Future growth in foundational technologies like artificial intelligence and quantum computing will mean larger scale, energy-intensive computing infrastructure.”

🚇 The European Hyperloop Center, a new testing facility in the Netherlands, is ready to start testing prototypes. The 420-metre hyperloop test tunnel in Groningen was created to help companies advance towards the commercialisation of their hyperloop designs, which consist of ultra-fast transport capsules that would run on magnetic levitation inside a network of underground tunnels. 

• Dutch company Hardt Hyperloop built the tunnel, and its completion is encouraging news for a sector inspired by Elon Musk’s dream of travel at near-supersonic speeds, which has struggled with negative headlines in recent months.
• European startups and research organisations such as Zeleros, based in the Spanish city of Valencia, Nevomo, a Polish company headquartered in Warsaw and the Swiss non-profit EuroTube are among those expected to use the facility.

🇬🇧 The UK is set to launch a new visa on April 4 for researchers and interns seeking to work in five tech areas deemed critical by the British government (AI, engineering biology, telecommunications, semiconductors and quantum technologies), according to science minister Andrew Griffith. 

• The new Future Technology Research & Innovation (Government Authorised Exchange) visa scheme was floated last autumn. It's aimed at helping innovative companies attract talent from outside the UK, on internships and placements. In easing the travel process, it hopes to help alleviate the UK's skills shortages, which has been impacted by the end of freedom of movement with most of Europe since Brexit.

💳 London-based payments fintech GoCardless announced increased net losses last year as it bids for profitability in 2025. That's according to figures covering the 12 months to June 2023 — which were shared with Sifted ahead of the fintech filing its annual report with the UK’s Companies House. 

• While global revenue grew 31% year-on-year to £91.9m, net losses increased to £79.6m from £62.9m in the prior financial year.

🗣️ “We’re not out of the woods yet” — Mistral, Graphcore and Kry investor Avid Larizadeh Duggan sits down with Sifted to discuss the state of M&A, growth-stage funding and the real opportunities in AI.

Meet the UK & Ireland’s fastest-growing startups

Dive into our inaugural regional leaderboard, ranking the top 100 companies on a high-growth trajectory across the UK and Irish ecosystems. 

Austria’s startups haven’t been immune to market shakes, but they made great strides in 2023 in reaching profitability, according to a new report by Austrian Startup Monitor.

• 23.5% of the 464 startups surveyed in 2023 were profitable, up from 18% in 2022. The number of startups that broke even in 2023 also increased to 17.7%, up from 15.1% in 2022.
• The average number of employees at startups slightly increased in 2023, from 11.7 to 12.3, with 79% of startups saying they plan to hire in the next year. The report calculates that more than 10k new hires will be made by Austrian startups in the next 12 months. 
• “The fact that Austria’s startups have become significantly more profitable in the last year and at the same time have recorded increases in employment underlines their resilience and important role as a growth engine,” says Karl-Heinz Leitner, a research scientist at the Austrian Institute of Technology who led the study.
• Elsewhere in the report are signs of Austria’s strong domestic sales market — 62% of the startup sector‘s sales are generated at home; 73% of startups have already entered international markets and 18% plan to expand abroad for the first time in the near future.

Frankfurt, Germany-based Gunzilla Games, a game developer, raised $30m in funding, including $10m in tokens. CoinFund and Blizzard Fund led the round and were joined by Republic Capital and Morningstar Ventures. 

Freital, Germany-based Watttron, which develops digital temperature control systems, raised €12m in Series B funding. Circular Innovation Fund and European Circular Bioeconomy Fund led the round and were joined by investors including TGFS Technologiegründerfonds Sachsen, Constancia New Business and SKion.

Geneva, Switzerland-based Hive, which offers cloud storage solutions, raised €12m in Series A funding. SC Ventures led the round and was joined by investors including OneRagtime.

Grenoble, France-based Diamfab, which synthesises diamonds for the semiconductor industry, raised €8.7m in funding from investors including Asterion Ventures managed by Bpifrance, Kreaxi, Better Angle, Hello Tomorrow and Grenoble Alpes Métropole.

Bristol, UK-based WASE, which converts waste into biofuel, raised £8.5m in funding including £2.4m in debt. Extantia Capital led the round and was joined by investors including Hitachi Ventures, WEPA Ventures and Engie New Ventures.

Stockholm-based Agteria Biotech, which is developing an enzyme-based feed additive to reduce livestock methane emissions, raised €1.4m in pre-seed funding from Norrsken Launcher.

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